ASAP

With roughly two weeks left to the House's legislative calendar before its summer recess, many businesses are not paying attention to the chamber's activities. This would be a mistake for many federal contractors, as lawmakers have been slipping amendments into several appropriations bills under consideration that could have significant implications for their operations. Notably, Rep. Keith Ellison (D-MN) has successfully introduced amendments to various agency funding bills that would effectively debar contractors that have committed Fair Labor Standards Act (FLSA) violations within the past five years. Such violations could include a finding of fault and liability in any civil, criminal, or administrative proceeding, including entering into wage and hour conciliation agreements or consent decrees that include a “finding of fault.”

As previously reported, last month the following amendment was incorporated into the Department of Defense (DoD) appropriations bill:

Sec. __. None of the funds made available in this Act may be used to enter into a contract with any person whose disclosures of a proceeding with a disposition listed in section 2313(c)(1) of title 41, United States Code, in the Federal Awardee Performance and Integrity Information System include the term "Fair Labor Standards Act."

The “dispositions” listed in section 2313(c)(1) include not only a conviction or a civil or administrative finding of fault, but also:

To the maximum extent practicable and consistent with applicable laws and regulations, in a criminal, civil, or administrative proceeding, a disposition of the matter by consent or compromise with an acknowledgment of fault by the person if the proceeding could have led to [a criminal conviction; a civil finding of fault and liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more; or in an administrative proceeding, a finding of fault and liability that results in the payment of a monetary fine or penalty of $5,000 or more or the payment of a reimbursement, restitution, or damages in excess of $100,000]. (emphasis added)

The same amendment (H. Amdt. 1021) was included in the House-passed Energy appropriations bill (H.R. 4923) on July 10. It is anticipated that Rep. Ellison will once again introduce this amendment to the Financial Services and General Government Appropriations Act of 2015 (H.R. 5016), scheduled for floor consideration this week.

Many federal contractors have claimed that this amendment is both unnecessary and unfairly punitive. The Federal Acquisition Regulation (FAR) Part 9.4 already sets forth causes and procedures for contractor suspension or debarment. Among the actions that could result in contractor debarment is the "commission of any offense indicating a lack of business integrity or business honesty that seriously and directly affects the present responsibility of a Government contractor or subcontractor.” An FLSA violation arguably falls under this umbrella. In addition, the Department of Labor, the agency charged with investigating and enforcing FLSA claims, is already able to debar a federal contractor if it determines a violation has occurred.

The problem with the amendment is its breadth. The FLSA and its implementing regulations are highly complex, making it relatively easy for a contractor to find itself inadvertently in violation of any one of its provisions. As written, the amendments could penalize contractors that recognize their FLSA noncompliance and voluntarily enter into consent decrees or conciliation agreements for such violations. Contractors might be deterred from entering into these agreements that acknowledge fault.

Many bills targeting "wage theft" have been introduced in recent years, but none have advanced. Including this type of language in appropriations bill amendments is a quieter – and so far, more effective – approach. Many in the federal contractor community will be watching how the House proceeds this week with the Finance appropriations measure, as well as whether House-approved amendments to appropriations bills survive in the Senate.

Update: On July 15, Rep. Janice Schakowsky (D-IL) offered H. Amdt. 1074 on behalf of Rep. Ellison. The amendment was agreed to by voice vote.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.